Thursday, May 31, 2018

Trudeau Says U.S. Borrowing Is Unsustainable


Ha!  President or wtf of Canada:

U.S. government borrowing is not sustainable and divisive social policies will ultimately exacerbate tensions that will disrupt American business profitability, Canadian Prime Minister Justin Trudeau said. 
Asked in an interview how his government will respond to competitiveness concerns spurred by U.S. tax cuts, Trudeau said Canada is focused on generating long-term economic growth and wouldn’t engage in a “race to the bottom.” “I certainly know that I remain focused on the long term,” Trudeau said Tuesday in an interview with Bloomberg’s Stephanie Flanders, before appearing to conflate the U.S. debt and deficit. 
“I mean what’s the U.S. debt approaching now, is it a trillion dollars? I mean, we’re talking about something that is not sustainable.”

Yeah this looks like great progress here.... I know, I know... "neoliberal conspiracy lies!!!!"..... And PS looks like he is with EVERYBODY (and I mean EV-ER-EE-BOD-EEE...) else on US deficit going to $1T this year...






15 comments:

Konrad said...

“I mean what’s the U.S. debt approaching now, is it a trillion dollars? I mean, we’re talking about something that is not sustainable.”

Trudeau was talking about the recent U.S. federal tax cuts. Therefore Trudeau is referring to the U.S. federal debt (sometimes called the “national debt”) which is $21.1 trillion. This is the total amount of money that is currently on deposit in Federal Reserve savings accounts. It is called a “debt” because it is on loan to the Fed, just as customer deposits are on loan to regular banks. All banks are in debt to their depositors.

This has nothing whatsoever to do with the U.S. government’s ability to create money out of thin air. Nor will any American citizen ever have to pay back one penny of the “national debt.” Nor are deposits in Fed savings accounts “unsustainable.” Idiots have been claiming that Fed deposits are "unsustainable" for decades.

What is actually unsustainable is all other kinds of debt, such as mortgages, students loans, and local government debt. This is far more than $1 trillion, and it is crippling the U.S. economy, and hollowing out U.S. society.

Tom Hickey said...

Uh, the neoliberal conspiracy is about duping the rubes — Trudeau.

Trudeau his not a moron. He is just following "the experts" that represent the neoliberal conspiracy.

Of course it's not only the neoliberal conspiracy. The Samuelson conspiracy played a part in by creating New Keynesianism.

Samuelson is on record agreeing with James Buchanan about the need for the "the noble lie" to prevent the rabble from raiding the treasury through loose fiscal policy.

Matt Franko said...

Trudeau is left of Lenin...

Bob Roddis said...

The fact that a government allegedly has the ability to create unlimited amounts of new fiat funny money to pay off debts while keeping a brain dead populace oblivious to the process does not mean that there will be a roughly equivalent amount of goods and services available to satisfy the expectations of the debt holders or promisees of government largess.

Further, the entire MMT paradigm is based upon the power elite overriding the popular democratic consensus. If there was a popular consensus for a particular level of taxation and government spending, that could easily translate into action. MMT is based upon the fact that voters will not approve such a level of taxation and spending so the new "spending" of new funny money is done despite the lack of democratic consensus and without due process of the people whose savings are diluted by the new funny money.

Matt Franko said...

He thinks Trump is going to have to come crawling by year end as us will run out of munnie... this is his negotiating strategy...

Sanjay Mittal said...

I'm getting sick of the word "sustainable" and all other currently fashionable buzz words. an accelerating car is not a "sustainable" system: it cannot go on accelerating for ever!! Ha ha.

Konrad said...

”Samuelson is on record agreeing with James Buchanan about the need for the ‘the noble lie’ to prevent the rabble from raiding the treasury through loose fiscal policy.” ~ Tom Hickey

Yes. The actual quote is: “The superstition that the federal budget must be balanced at all times, once it is debunked, takes away one of the bulwarks that every society must have against expenditure out of control. There must be discipline in the allocation of resources, or you will have anarchistic chaos and inefficiency. One of the functions of old fashioned religion was to scare people by myths into behaving in a way that long-run civilized life requires. We have taken away a belief in the intrinsic necessity of balancing the budget.”

For people like Paul Samuelson and James M. Buchanan, a “balanced federal budget,” means that deficit spending for the wars and for the rich should be balanced by cutting social programs for the middle and lower classes. Only Wall Street and weapons makers should be allowed to freely raid the Treasury.

James M. Buchanan said the U.S. government should only have deficits during wartime. Since the U.S. government is always at war, this means (again) that deficit spending for the wars and for the rich should be balanced by cutting social programs for the middle and lower classes. This is what right wingers and neoliberals mean by a “balanced budget.”

The “noble lie” is noble because it keeps the rich in splendor, and the rest in squalor. This is necessary to make average people “behave in a way that long-run civilized life requires,” as Samuelson says. And “civilized life” requires ever-worsening inequality.

All neoliberals are liars. Ronald Reagan whined all his life about deficit spending until Reagan got into the White House, upon which Reagan dramatically increased US deficit spending on the military. W. Bush did the exact same thing. Dick Cheney whined about deficit spending until he became Vice President, upon which Cheney said that, “Deficits don’t matter.”

The neoliberals’ “noble lie” includes the lie that the U.S. government has a “debt crisis.” Both Samuelson and Buchanan knowingly lied about this, and both were rewarded with Nobel Prizes.

After the U.S.-engineered coup that allowed the blood-drenched dictator Pinochet to take supreme power in Chile, Buchanan helped Pinochet re-write Chile’s constitution to change it from populist to neoliberal. Pinochet imposed his new constitution on the Chilean people in 1980.

For people like Samuelson, Buchanan, and Pinochet, we must use the “noble lie” to keep people in poverty, or else the masses might demand equality.

Incidentally in the video below at 1:45 you can see Samuelson saying the quote above during an interview for the film, “John Maynard Keynes: Life/Ideas/Legacy.” (1995)

https://www.youtube.com/watch?v=4_pasHodJ-8

Marian Ruccius said...

Trudeau is a right-wing liberal, with progressive tendencies as regards questions of personal liberty and social exclusion. He has been pedaling this sound finance nonsense since he got into power, but his civil servants, largely Stephen Harper's retrograde morons, fear briefing him honestly, as their whole careers were built on strict ideological obedience to Harper's reactionary views. Thankfully, at least the Governor of the Bank of Canada, Stephen Poloz, knows this to be nonsense.

Marian Ruccius said...

Err peddling

Andrew Anderson said...

and without due process of the people whose savings are diluted by the new funny money. BR

Certainly new fiat should be created in an ethical manner and I can think of only two ethical means to create new fiat:

1) Via defict spending by the monetary sovereign for the general welfare.
2) Via equal fiat distributions to all citizens.

Non-ethical means of fiat creation include:
1) Lending by the Central Bank.
2) Asset purchases by the Central Bank from the private sector.
3) Currency swaps.

But certainly new fiat SHOULD be created to keep up with population growth and potential growth* in the economy. And that fiat should be as inexpensive as is practical.

*Even deflation lovers like the Austrians dare not call for the abolition of gold mining YET. So even Austrians believe in SOME fiat creation or at least they dare not oppose it completely.

Konrad said...

Trudeau has been pedaling this sound finance nonsense since he got into power.

Yes, while Trudeau was campaigning for the 2015 election, he promised budget deficits of no more than $10 billion each year, with a balanced budget by the end of his first mandate in 2019/20.

Fortunately Canada’s budget has come nowhere close to those numbers. It if had, then Canada would be in a recession, like the UK, which has had eight years of gratuitous austerity cuts.

In Australia, Treasurer Scott Morrison is threatening to have a budget surplus within two years.

Andrew Anderson said...

In Australia, Treasurer Scott Morrison is threatening to have a budget surplus within two years. Konrad

That kind of stupidity is encouraged by positive yields on the inherently risk-free debt of monetary sovereigns since it implies that the monetary sovereign MUST borrow otherwise why would it PAY INTEREST?

lastgreek said...

He has been pedaling this sound finance nonsense since he got into power...

Ironically, in the last election he campaigned to the left of the NDP!

Konrad said...

@ANDREW ANDERSON: You make a good point. People refuse to understand the difference between [1] U.S. government spending and [2] The Fed paying interest on Treasury securities. These are two different operations.

When the U.S. government pays to buy an aircraft carrier, or pays a Social Security benefit, the U.S. government creates that money out of thin air by ordering the recipient’s bank to credit his or her account. Not a penny of that money is borrowed from anyone, nor is it issued by the U.S. government as a loan. The bank, following government instructions, simply changes the numbers in accounts.

By contrast, interest is what the Fed pays to parties that buy Treasury Securities, and who thereby deposit money in Fed savings accounts. Buying a T-security is exactly like buying a CD from a regular bank. When you buy a CD (certificate of deposit) from a bank, you agree to leave your money in a savings account for an agreed-to amount of time for an agreed-to rate of interest. The Fed creates money out of thin air to pay interest on T-securities. People refuse to understand that this Fed operation is separate from US. government spending.

Contrary to popular opinion, the U.S. government does not “pay off debts.” The so-called “debt” is money that parties have lent to the Fed by depositing money in Fed savings accounts. When a T-security matures, the Fed gives back the depositor’s money, plus interest, thereby paying off the so-called "debt."

As I said above, all banks (including the Fed) are in debt to their depositors. If you close your accounts at the bank, then the bank is no longer in debt to you.

Michael Norman said...

Ha! WTF indeed!!